Revenue riddles

Context:

According to the recent estimates, India's Goods and Services Tax (GST) collections are expressing concerns over slowing growth and anomalies in import-related revenues.

Concerns about GST Revenues

• Slowing Growth Trend: GST collections in September 2023 showed a slowdown, with a growth rate of 10.2%, the lowest since July 2021.
• Factors Contributing to Slowdown: The growth in revenues from domestic transactions and services imports has decreased from 18% in June to 14% over the past two months.
• Impact of Pending Dues and E-Invoicing: September's revenues included pending dues from businesses since the GST regime's inception in 2017-18. Mandatory e-invoicing for firms with turnovers above ?5 crore since August 1 also affected compliance.

Analyzing Trends

• Shrinking Goods Imports Revenues: Revenues from goods imports have decreased significantly this year, raising concerns about possible revenue leakages.
• Anomalies in Import-Related Revenues: Despite a surge in goods imports to a nine-month high of $58.6 billion in August, revenues collected in September were 5.7% lower than the previous month.
• Need for Deeper Investigation: Authorities should conduct a thorough investigation to identify potential revenue leaks in the import sector.

Macroeconomic Resilience

• Positive Fiscal Outlook: India's GST revenues for 2023-24 stand at over ?9.92 lakh crore, showing an 11.1% increase over the previous year, with average monthly revenues of ?1,65,418 crore.
• Festive Season Boost: The ongoing festive season is expected to maintain collections above ?1.6 lakh crore this quarter, providing a comfortable margin for the government.
• Anticipated Slowdown in Q1 2024: The central bank expects a slowdown in real GDP growth to 5.7% in the January-March 2024 quarter, prompting the need for careful fiscal planning.